How to read forex charts on MetaTrader 5

What you’ll learn

• What one candle records: the open, high, low and close, plus what the wicks reveal about rejection.
• How to pick a timeframe that fits the length of time you plan to stay in a trade.
• How trend structure emerges from higher highs and higher lows, and the first warning signs it is ending.
• A step by step method for drawing support and resistance zones.
• Setting up MetaTrader 5 drawing tools, Fibonacci levels, indicators, templates and alerts at TabTrade.
• Combining everything into one worked trade setup on a TabTrade MetaTrader 5 chart.

Anatomy of a candle

A single candle condenses one time period into four prices.

Every chart in this lesson is drawn on MetaTrader 5, the platform the tools, templates and alerts below are set up on.

• A green (bullish) candle finishes above its opening price.
• A red (bearish) candle finishes below its opening price.
• The body signals conviction, because it marks where price actually closed for that period.
• The wicks signal rejection, because they show where price reached and was then forced back.

On a 4‑hour candle, a long lower wick means buyers entered aggressively at that level and held it. You can trade on that information. When the body is long and the wicks are almost absent, one side controlled the whole session without any real pushback.

Here is a concrete example using illustrative prices. Suppose a 4‑hour candle on EURUSD prints like this:

Open:  1.0850
High:  1.0875
Low:   1.0820
Close: 1.0865

The body is 15 pips (close minus open, 1.0865 - 1.0850). The lower wick is 30 pips (open - low, 1.0850 - 1.0820). The upper wick is 10 pips (high - close, 1.0875 - 1.0865). Price fell hard, found support at 1.0820, and then buyers drove it back above the open to close near the session high. That is a clear rejection of the 1.0820 area. A trader seeing this candle knows two things: sellers tried to push lower and failed, and buyers finished the period in control. That is actionable information.

A common beginner mistake is to look only at the body and ignore the wick. A candle that closes near its open but has an enormous lower wick tells you far more than a tiny body suggests. The wick is the market’s way of saying “we tested that price and it was rejected”. Listen to it.

Timeframes

The timeframe controls how much time each candle covers, so choose one that lines up with how long you expect to hold.

Style	Hold time	Entry chart	Context chart
Scalping	Minutes	M1 - M5	M15 / H1
Day trading	Hours	M15	H1 / H4
Swing trading	Days - weeks	H4	Daily / Weekly

Lower timeframes carry more price noise, a higher dealing cost relative to each unit of movement, and less time between reading a signal and acting on it.

To see why, put all-in dealing cost next to a typical move. On TabTrade’s Edge account, an illustrative EURUSD round turn combines the 0.03-pip average spread with commission equivalent to 0.70 pip per standard lot, producing a 0.73-pip all-in cost. That cost consumes a much larger share of a small move than a large one.

For the dealing cost behind these examples, see how TabTrade’s spreads were measured.

Timeframe	Typical move you might trade	All-in Edge cost as % of move (0.73 pip)
M1	5 pips	14.6%
M5	10 pips	7.3%
H1	30 pips	2.4%
H4	50 pips	1.5%

Noise works the same way. A 15‑pip random wick on the M1 chart can easily trigger a 20‑pip stop, even if the overall direction is correct. On the H4 chart that same wick is a small fraction of the candle’s range. Stops hit repeatedly by a few pips are a symptom of the timeframe as much as of the stop distance.

Trend structure

Remove the indicators and a trend is simply a sequence of turning points.

• Uptrend: every swing high comes in above the previous one, and every pullback finds a low above the previous low.
• Downtrend: a sequence of lower highs and lower lows.
• Range: highs and lows keep returning to roughly the same two levels.

When that pattern fails, for example an uptrend records a lower low, the structure has shifted, and any bias you were holding has to shift too.

When a trend ends: the first warning signs

Trends do not reverse in a single tick. They leave footprints, and the first footprint is almost always a broken swing point. Reading that early saves you from holding a bias that the chart has already abandoned.

Take a clean uptrend on GBPUSD:

Swing low 1:  1.2500
Swing high 1: 1.2600
Swing low 2:  1.2550  (higher low ✓)
Swing high 2: 1.2650  (higher high ✓)
Swing low 3:  1.2520  ← lower than swing low 2

The moment swing low 3 prints at 1.2520, the sequence of higher lows is broken. The trend is not necessarily over, but it is wounded. The next rally now has to prove itself. If it fails to make a new high above 1.2650 and instead rolls over, you have a lower high and a lower low: the definition of a downtrend has arrived.

A lower low in an uptrend does not by itself define a downtrend. It does mean the sequence that justified resting buy orders and existing long stops has broken. Whether the break was a trap or the start of a new sequence is only visible in the price that follows.

Support and resistance

A price level carries weight because the market has already reacted there, and enough traders remember that reaction. Mark your levels on the higher timeframe, then use them for entries on the lower timeframe. Two habits help here:

1. Zones rather than lines. Reactions have historically clustered across an area rather than at one exact number.
2. The more touches, the more the level is watched, up to a point. Levels tested many times have both held and broken; the count alone does not settle which.

Drawing support and resistance zones: a step‑by‑step guide

Most traders draw too many lines and trust them too quickly. A methodical approach fixes both problems.

Start on the daily chart. Look for places where price reversed at least twice. Record every touch with its exact price.

Example (a zone on USDJPY):

Touch	Date (illustrative)	Price
1	3 March	150.10
2	17 March	149.85
3	2 April	150.20
4	15 April	149.90

The touches cluster between 149.85 and 150.20. That is the zone. It is drawn as a rectangle from 149.85 to 150.20 rather than a single line at 150.00, because the recorded reactions fall anywhere inside that 35‑pip band.

Now step down to the H4 chart for an entry plan. Price approaches the zone from above and prints a bullish rejection candle at 149.92. The candle’s low is 149.82, just below the zone, but the close is back inside it. That is your signal.

A simple plan:

• Entry: 150.00 (after the rejection candle closes)
• Stop: 149.75 (below the zone and below the wick)
• Target: 151.50 (next visible resistance on the daily chart)

Risk: 25 pips. Reward: 150 pips. The arithmetic is clean, and the stop sits beyond the band the recorded touches covered.

A zone touched four or five times is widely watched, and each touch is also a test it may not survive. A later touch carries no more information about the outcome than the first three did.

Always check the timeframe above

Before taking any trade, open the chart one or two timeframes higher and ask “am I buying straight into resistance?” For most new traders this is the cheapest improvement available. An M15 long that looks clean on its own is not clean if it is running straight into a daily supply zone.

A real example makes the point. On the M15 chart, AUDUSD is trending higher. You spot a pullback to 0.6700, with a bullish engulfing candle. The setup looks textbook: entry at 0.6710, stop at 0.6680 (30 pips), target at 0.6770 (60 pips). A neat 1:2 risk‑reward.

Now open the daily chart. There is a major resistance zone at 0.6720 - 0.6740 that has capped price three times in the last two months. Your 60‑pip target sits well above that zone, but price has to chew through it first. The realistic room before resistance is not 60 pips; it is 10 pips.

Perspective	Resistance	Room before resistance	Risk	Reward potential
M15 only	None visible	60 pips	30 pips	60 pips
With daily	0.6720 zone	10 pips	30 pips	10 pips (realistic)

The trade is not invalid, but the odds have shifted. You either pass on the setup, wait for a confirmed break of the daily zone, or reduce the target to just below resistance and accept a smaller reward. The daily chart did not give you a different opinion; it gave you the information the M15 chart could not see.

Rule of thumb: Look at price before you look at indicators. Indicators are built from price, and price is the underlying source.

Chart hygiene: scale, spacing and clutter

A messy chart makes you second-guess every decision. Before you draw anything, get the basics right.

First, fix your chart scale. A chart that is squeezed too far left or zoomed in to three candles makes levels look more precise than they are. Use enough history so you can see the last two or three swings clearly.

Second, turn off the grid or set it to a faint grey. The default grid on most platforms competes with your drawn lines. You are not counting squares; you are reading price.

Third, remove all indicators you do not actively use. A blank chart with a few clean markings is easier to read than a rainbow of moving averages you never look at.

Drawing tools worth learning

Horizontal line

A horizontal line marks a price level where the market has turned before. You will reach for this one more than any other. Draw it across a recent swing high or low and watch how price behaves when it returns. The line is not a rule. It is a place to pay attention.

A common beginner mistake is placing a horizontal line on a wick that barely touched a level for a second. That is not a level the market respected. Look for places where price closed at that area multiple times, or where a sharp reversal began from a cluster of candles.

Rectangle

A rectangle marks supply and demand zones. It works better than a line because a level is really an area. Price rarely turns exactly on one pip. A narrow rectangle (maybe 10 to 20 pips wide on a daily chart) captures the zone and stops you from taking a trade too early because price “almost” hit your line.

When you draw a rectangle, anchor the top to the highest wick of the zone and the bottom to the lowest wick, then colour it faintly. On TabTrade’s MetaTrader 5, you can set the rectangle’s fill colour to a low opacity so the candles remain visible behind it.

Trend line

A trend line works best when you anchor it to either candle bodies or wicks, but stay consistent. Pick one and stick with it. If you use wicks on the first anchor, use wicks on the second and third touches. Mixing body and wick anchors turns the line into a guess.

A trend line needs at least two touches and becomes useful at three. The more candles between the anchors, the more weight the line carries. Beginners often join the first two bars after a reversal and call it a trend line, then get stopped out when price breezes through it. A third touch is what confirms the line.

Fibonacci retracement

A Fibonacci retracement runs from swing low to swing high, in the direction of the trend. In an uptrend, drag the tool from the lowest point of the swing to the highest point. In a downtrend, drag from swing high to swing low. MetaTrader 5 includes the core default levels. The 78.6% level normally needs to be added manually in the tool properties.

A worked example with round numbers makes the maths clear.

Using illustrative prices, suppose EURUSD rallies from a swing low at 1.05000 to a swing high at 1.07000. The range is 0.02000, or 200 pips. To find the 61.8% retracement level:

1. Range: 1.07000 − 1.05000 = 0.02000
2. 61.8% of the range: 0.02000 × 0.618 = 0.01236
3. Subtract from the high: 1.07000 − 0.01236 = 1.05764

The 50% level sits at the swing midpoint: 1.06000. The 38.2% level sits at 1.06236. If price pulls back and holds around the 61.8% level, some traders look for long entries there, expecting the uptrend to resume.

The 50% level is not a true Fibonacci ratio, though it is widely watched. A chart with only the main levels stays readable; every extension and expansion level added before a basic pullback is clear only clutters the screen.

Give each timeframe its own colour

Use one colour for daily levels and a different one for H4. After a week, you will read your own charts far more quickly. The daily zone stays visible on lower timeframes and the colour tells you instantly where it came from. A third colour for intraday levels such as H1 keeps the hierarchy clear without needing labels.

A quick reference that works for many traders:

Timeframe	Suggested colour	Purpose
Daily (D1)	Dark blue	Major structure
4-hour (H4)	Orange	Intermediate levels
1-hour (H1)	Grey dashed	Short-term reaction zones

Fibonacci in practice

In an uptrend, place the Fibonacci from the swing low to the swing high. The 38.2% - 61.8% band marks the retracement zone. The 50% level is not a true Fibonacci number, but it behaves like one because so many traders watch it.

That zone is where a trigger is watched for: an engulfing candle or a lower-timeframe CHoCH. On its own the zone is not an entry signal.

The −27.2% and −61.8% extensions give you objective take-profit levels beyond the prior high.

Fibonacci arithmetic on a live example

Worked example using illustrative EURUSD prices in an uptrend.

• Swing low: 1.0800
• Swing high: 1.1000
• Range: 1.1000 − 1.0800 = 0.0200, which is 200 pips

The retracement levels:

• 38.2% level: 1.1000 − (0.0200 × 0.382) = 1.09236, roughly 1.0924
• 50% level: 1.1000 − (0.0200 × 0.500) = 1.0900
• 61.8% level: 1.1000 − (0.0200 × 0.618) = 1.08764, roughly 1.0876

The extension levels:

• −27.2% extension: 1.1000 + (0.0200 × 0.272) = 1.10544, roughly 1.1054
• −61.8% extension: 1.1000 + (0.0200 × 0.618) = 1.11236, roughly 1.1124

Level	Formula	Price
38.2% retracement	1.1000 − 0.0200 × 0.382	1.0924
50% retracement	1.1000 − 0.0200 × 0.500	1.0900
61.8% retracement	1.1000 − 0.0200 × 0.618	1.0876
−27.2% extension	1.1000 + 0.0200 × 0.272	1.1054
−61.8% extension	1.1000 + 0.0200 × 0.618	1.1124

Suppose a lower-timeframe CHoCH appears at 1.0910, near the 50% level. A stop below the 61.8% level at 1.0874 gives a 36 pip risk. That is 1.0910 − 1.0874 = 0.0036, or 36 pips. A target at the −27.2% extension of 1.1054 gives 144 pips. That is 1.1054 − 1.0910 = 0.0144. The reward/risk ratio is 144 ÷ 36 = 4.0.

Position size example with an obviously illustrative $5,000 account:

• Planned risk: 1% of $5,000 = $50
• Stop distance: 36 pips
• EURUSD pip value for 1 standard lot: $10
• Position size: $50 ÷ (36 × $10) = 0.139 lots

Round down to 0.13 lots. Actual risk: 0.13 × 36 × $10 = $46.80.

On a TabTrade Edge account, the published average spread for EURUSD is 0.03 pips and the commission is $3.50 per lot per side, which is $7.00 round turn per lot. For 0.13 lots:

• Commission: 0.13 × $7.00 = $0.91
• Spread cost: 0.13 × 0.03 pips × $10 = $0.039
• Total modelled cost: about $0.95

Spreads are variable. The arithmetic is for modelling, not a promise of execution cost.

Indicators without clutter

Stick to two or three indicators at most. They should each measure something different: one for trend, one for momentum, one for volatility. Three momentum oscillators just repeat the same information three times and create a false sense of confirmation.

The three‑indicator rule in practice

Pick no more than one from each group below.

Group	What it tells you	Example indicators
Trend	Direction and strength of the move	Moving average (SMA or EMA), Parabolic SAR, Ichimoku cloud
Momentum	Speed of price and potential exhaustion	RSI, Stochastic, MACD histogram
Volatility	How much the market is moving	ATR (Average True Range), Bollinger Bands width

A common setup on a clean H4 chart is a 50‑period EMA (trend), RSI set to 14 (momentum), and ATR set to 14 (volatility). The EMA shows whether the market is sloping higher or lower. The RSI warns when a move may be stretched. The ATR helps decide where to place a stop so it sits outside normal noise.

The mistake beginners make is adding a 20 EMA, a 50 EMA, a 200 EMA and an RSI, then wondering why the screen flashes red and green with every tick. Each extra line divides your attention, it does not multiply your edge. If you cannot explain in one sentence why each indicator is on the chart, remove it.

Templates

Create one template for each strategy, such as Trend H4 or Range M15. Changing strategy then takes one click instead of ten minutes of setup. On MetaTrader 5, right‑click the chart, choose “Template” → “Save Template” and give it a name. The file stores your drawn objects, indicator settings, colours and chart type.

Build your template during a quiet market period. Open a fresh chart, set the timeframe, add your two or three indicators, draw one example of each drawing tool you normally use, and save. The next time you switch from a trend strategy to a range strategy, load the template and the workspace is ready.

Avoid the trap of modifying the template every day. Constant tweaking is often a substitute for patience. Save a new version only when you have traded the same setup for at least a week and can point to a specific reason for the change.

Alerts

Put price alerts at your levels rather than keeping your eyes on the screen. The main cause of impulsive entries is boredom while waiting, and alerts remove that pressure.

On TabTrade’s MetaTrader 5, you can set an alert by right‑clicking a level on the chart or by using the “Alerts” tab in the terminal. Set the alert slightly ahead of your zone so you have time to act. For example, if your buy zone on EURUSD is 1.05764 (the 61.8% level from earlier), you might place an alert at 1.05850. The alert pings your phone, you open the chart, and you assess whether price is still respecting the zone before entering.

A complete example: the H4 trend chart

Here is how the pieces fit together on one workspace, using TabTrade’s MetaTrader 5 platform.

Assume you are watching GBPUSD on the H4 timeframe. You have an Edge account, where the average spread on GBPUSD is 0.04 pips. The numbers below use round figures for illustration only.

• Chart hygiene: grid off, candles showing two weeks of data.
• Timeframe colours: daily zones in dark blue, H4 in orange.
• Drawing tools: a daily rectangle marks the broad resistance area around 1.2750 to 1.2780. On H4, you draw a trend line connecting two higher lows at 1.2610 and 1.2650, with a third touch near 1.2685 confirming the line. You add a Fibonacci retracement from the swing low at 1.25900 to the current swing high at 1.28200.
• Indicators: a 50‑period EMA on the chart acts as a dynamic trend guide. RSI 14 sits below the price chart, and ATR 14 gives an average true range of 42 pips.
• Template: save everything as “GBPUSD Trend H4” so tomorrow you load it in one click.
• Alerts: set a price alert at the 61.8% retracement level, 1.26779, and another at the trend line intersection near 1.27000.

When price pulls back towards the alert, you open the chart, note that the EMA is still sloping higher and RSI is not yet oversold, and you watch how price reacts at the zone. The ATR tells you a stop 50 pips below the level is outside the average range, giving the trade room to breathe without constant stop‑outs.

This routine turns a collection of tools into a repeatable process. You are not looking for a trade. You are waiting for the market to reach a level you already respect, on a chart you have already prepared.

Rule of thumb: If you cannot describe your chart setup in thirty seconds to another trader, it is too complicated.